Sourcing Management Software: Everything You Need to Know

When it comes to procurement, sourcing is the process of identifying, evaluating, and working with suppliers so that the business can save money and maximise its value at a price. It provides a margin that is sufficient to positively impact its bottom line at the same time. A tendering process is implemented at a tactical and strategic level to locate the most suitable suppliers at the lowest cost to create distinctive value.

The article explores sourcing management software from the ground up in absolute detail.

Sourcing Management

The first step in the strategic supply process is to identify clear expectations for materials, products, and services. This step analyses raw materials, finished products, office supplies, maintenance, security, and distribution expenses. Next, the lowest-total-cost suppliers are carefully compared to current and prospective suppliers, and the lowest-cost suppliers are selected. As a final step, processes are designed to monitor supplier performance regularly to ensure continuous improvement.

It is crucial to strike the right balance between raw material quality, price, and raw material requirements. In most cases, procurement teams strive to reduce costs and increase revenue. Today’s competitive market forces businesses to focus on producing value while taking advantage of cost and waste reduction. There should also be an added emphasis on the cost-saving benefits of strategic sourcing. A sourcing management system allows you to track all aspects of your sourcing process and keep in touch with your suppliers.

E-Procurement

In the 1990s, technology improved, and software companies began forging online catalogues that vendors could use. It was known as an amalgamation of both: an electronic order management system and a catalogue management system.

It improves customer relationships with suppliers and strengthens internal business processes with e-procurement. Several benefits are provided by e-procurement for your organisation, some of which are listed below:

• Automates laborious tasks
• Improved workflows for procurement
• Visibility of your purchasing behaviours
• Connecting to external supply chains and Enterprise Resource Planning (ERP)

In addition to identifying specific needs, selecting vendors, and managing finances, procurement teams often utilise procurement solutions.

Basics of Procurement Software

You must examine your sourcing function more strategically to add value to your business consistently. Compared to simple purchasing automation, Strategic Sourcing has proved to increase operating margins, build brand value, and improve sustainability over the long run.

You can simplify strategic sourcing with the right procurement tools and software. Getting an understanding of sourcing management software begins with the following.

1. Management of Requests For Quotes

A request for quote (RFQ) document provides a company with pricing options for specific products or services. This is typically done when the products or services are highly specialised and the company wants to compare pricing from different vendors.It’s important to get the best price for the products or services your company orders from suppliers. Requests for Quotes (RFQs) help you identify the right vendor by allowing you to evaluate responses to RFQs that are tailored to your company’s specific requirements.

2. Vendor Onboarding

Increase compliance by optimising your supplier onboarding process. Track performance and create and issue corrective action plans accordingly. You can mitigate a vendor’s or factory’s potential risks by organising, vetting, and managing them.

3. Vendor Performance Tracking

Working with a vendor is a long-term process that requires you to track their performance to ensure you’re getting the most out of the relationship. The sourcing software is designed to help businesses keep track of orders, how quickly products are being manufactured, and when they are being shipped out from suppliers. By using this software, businesses will be able to get a better idea of whether or not a specific vendor is a good fit for them or if they should start looking for a new partner.

4. Strategic Sourcing

Through strategic sourcing, you align your purchasing power with your business strategy by considering factors such as supplier development, contract negotiation, and outsourcing models. As opposed to traditional sourcing, which involves finding a supplier based only on price and location, strategic sourcing considers more complex factors, such as quality.
RFQs can be simplified, and vendors can be selected quickly based on specific criteria. You can save time and money by managing the process centrally: comparing suppliers, evaluating quotes, sending notifications, and making a more strategic selection.

5. Supply Base Management

Manage vendor management on one cloud platform to reduce complexity. You can monitor everything from social and regulatory compliance to production capacity through full visibility into subcontractors and Tier 2 suppliers. Managing your entire supply chain through Supply Base Management (SBM) includes your immediate and minor suppliers and any future vendors. Procurement teams can use SBM to track information and risk pertaining to vendors.

6. Scorecards & Profiles Of Suppliers

Supplier scorecards, also known as vendor scorecards, allow buyers and suppliers to monitor their relationships. Buyers use scorecards to grade their suppliers according to metrics or categories. It is essential that vendor performance is monitored and managed when using supplier scorecards. Therefore, scorecards are a vital part of vendor management and evaluation.

Procurement and strategic sourcing managers are typically the primary administrators of supplier scorecards. An easy-to-use, central view of supplier performance facilitates timely corrective actions such as on-time deliveries, completion rates, and sample approvals.

Conclusion

The power of automation merged with procurement management software makes your procurement processes more efficient. The processes are designed to be self-sufficient to minimise manual intervention. Procol’s procurement software is one such solution that can streamline sourcing and purchasing workflows. Our next-generation procurement software eliminates any manual work and gives procurement teams complete control over procurement processes. This ensures that you can utilise a user-friendly and cost-effective solution.

Procol has helped organisations unlock industry-leading efficiency with incredible ROI by automating key procurement processes and creating transparency throughout the procurement system. Contact us today to schedule a demo.